GEICO and Warren Buffet
GEICO Corporation (Government Employees Insurance Company), headquartered in Chevy Chase, Maryland, is a subsidiary of Warren Buffett’s Berkshire Hathaway. It ranks as the third largest direct writer of U.S. auto insurance among the top 25 auto insurance companies for private passenger coverage, with a market share of 9.22%. Its major competitors in the auto insurance industry are Farmers Group, Inc., State Farm Mutual Automobile Insurance Company and The Allstate Corporation.
Brief History of GEICO
Leo and Lillian Goodwin, Sr. founded the company in 1936 to appeal to what they considered to be a low-risk group of customers, employees of the federal government and their families. Despite the use of the term government in its name, it has no affiliation with any government agency. In the mid 1960s, David Lloyd Kreeger helped the company expand beyond its traditional roots catering to the low-risk pool of government employees to include marketing auto insurance to the general public as well.
GEICO Insurance Sales and Geographic Market
GEICO underwrites automobile coverages in all 50 states as well as the District of Columbia, writing policies for more than 17 million vehicles owned by 11 million policyholders. GEICO markets itself to automobile owners using direct sales methods rather than a sales force of agents and has relied heavily on creating a distinctive brand using an animated Gecko with a Cockney accent named Martin as its television and online advertising mascot.
GEICO’s Magnificent Seven Auto Insurance Coverages
GEICO constructs each passenger auto policy based on what it calls the “Magnificent Seven Auto Insurance Coverages”, a combination of seven different primary coverages, each of which has a separate premium which is then totaled together to provide the customer with a comprehensive insurance package. The seven coverages offered by GEICO include Bodily Injury Liability, providing legal protection for drivers who injure or kill another party with their vehicle; Medical payments, no-fault, or personal injury protection coverage to pay for medical expenses for an injured driver and passengers; Uninsured Motorist Coverage covering injuries caused by a hit-and-run driver or an uninsured driver; Comprehensive Physical Damage Coverage to cover damage to a vehicle caused by something other than a collision, such as fire, theft or a natural disaster such as flooding; Collision Coverage which pays for damage repair to a vehicle that hits another object or is hit by an object; Property Damage Liability which legally protects the car’s owner for any damage it inflicts on the property of a third party; and Rental Reimbursement, which compensates the policy holder up to $25 a day to rent another vehicle when his is out of commission due to a loss suffered through collision or other damage covered by the comprehensive coverage portion of their policy.
In addition to these basic seven coverages, GEICO also offers Emergency Road Service to provide assistance 24 hours a day, 365 days a year to a vehicle which has broken down on the road, including emergency lockout and towing services, along with Mechanical Breakdown Insurance (MBI) covering problems that develop after the car’s warranty period has expired.
GEICO as an Organization
GEICO employs more than 27,000 people throughout the U.S. and considers itself one of the fastest-growing auto insurers in the nation. Although it maintains 12 regional offices in major metropolitan areas throughout the country, the bulk of its business is conducted online and by direct phone contact. In addition to auto insurance, GEICO also assists its policy holders with motorcycle, ATV, RV and boat insurance, homeowners, renters, condo, co-op and mobile home insurance, personal umbrella protection, life insurance,flood insurance, overseas insurance,commercial auto insurance and identify theft protection.